TMI Blog2020 (2) TMI 1611X X X X Extracts X X X X X X X X Extracts X X X X ..... it period and but has wrongly applied SBI PLR rate plus 300 basis point. The TPO should apply LIBOR plus basis points for making the adjustment on account of interest. Since in assessee s own case, the Tribunal has held that once working capital adjustment has been made, then no separate adjustment is called for on interest of receivables. The Tribunal has followed the judgment of Hon ble Delhi High Court in the case of PCIT vs. Kusum Healthcare Pvt. Ltd [ 2017 (4) TMI 1254 - DELHI HIGH COURT] As already direction for working capital adjustment has been given by DRP, therefore, we hold that no Transfer Pricing Adjustment on account of interest on payment of receivables can be made separately. Thus, the Transfer Pricing Adjustment on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... RP. 4. The brief facts qua the issue involved are that the TPO observed that there were interests on receivables on the payment for the invoices raised by the assessee which have not been received within the stipulated time as provided in the service agreement with the AE. In response to the show cause notice, the assessee has given invoice wise details of the receivables along with duration / period. Ld. TPO after detailed discussion held that credit period of 60 days is reasonable in view of DRPs direction in assessee s own case and accordingly, he applied interest rate of SBI PLR and worked out the interest @ 13% and after the calculating the interest beyond 60 days made an adjustment of ₹ 7,79,48,469/-. 5. The DRP, first of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Description of the transaction Amount [INR 1. Provisions of information and technology services 2 48,87,11,426/- 2. Cost recharges 2,22,89,684/- 3. Receivables [as on 31.03.2014] 86,07,95,107/- 4. Receivables [as on 31.03.2014] 4,11,07,016/- 6. During the course of transfer pricing assessment proceedings, the TPO was of the firm belief that since the payment for invoices raised by the assessee have not been received within the stipulated time. Delayed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding receivables from the AEs. The ld. AR further pointed out that the operating profit margin has not been disturbed by the Assessing Officer/TPO. Therefore, no separate adjustment is to be made in so far as outstanding receivables are concerned. 11. Per contra, the ld. DR supported the findings of the DRP. It is the say of the ld. DR that the objections raised by the assessee have been duly considered by the DRP and, therefore, the ld. DR directed the TPO to take 300 basis points over and above SBI PLR and to consider 60 days as reasonable period beyond which interest must be charged. 12. Having heard the rival submissions, we are of the considered opinion that since no disturbance has been made in so far as OP margin of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one AY and of receivables in relation to that AY can hardly reflect a pattern that would justify a TPO concluding that the figure of receivables beyond 180 days constitutes an international transaction by itself. With the Assessee having already factored in the impact of the receivables on the working capital and thereby on its pricing/profitability vis-a-vis that of its comparables, any further adjustment only on the basis of the outstanding receivables would have distorted the picture and recharacterised the transaction. This was clearly impermissible in law as explained by the court in CIT v. EKL Appliances Ltd. (2012) 345 ITR 241 (Del). 14. The ld. DR pointed out that the Revenue has preferred SLP before the Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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